Funding For Arizona Mortgage Fraud Probes Cut Off By Legislature

In Arizona, The Associated Press reports:

• At least 40 investigations of mortgage fraud and other illegal lending practices in Arizona are stalled because of a funding shortage. The Arizona Department of Financial Institutions has only two consumer investigators to keep up with more than 800 mortgage complaints this year. [...] To tackle the flood of complaints this year, the regulator hired independent investigators. But a plan to keep paying those contractors stalled during the last legislative session because some lawmakers said the mortgage industry should self-regulate. Now, dozens of investigations into mortgage fraud and other bad loans are waiting until the agency's investigators can get to them.

For more, see Lack of funds stalling Az probes into mortgage fraud.

NYC Feds Indict Six In Alleged Foreclosure Rescue / Equity Stripping Scam Operation

In New York City, Reuters reports:

• Six people were charged with fraudulently obtaining titles to scores of homes and taking out bad bank loans against them worth more than $20 million as part of a home foreclosure "rescue" scheme, according to a federal indictment unsealed in New York on Tuesday. [...] The defendants were accused of inducing people in danger of losing homes to deed the homes to third parties whose good credit would be used to take out new, larger mortgages or home equity loans to pay off previous mortgages and prevent default or foreclosure.

• Homeowners were allegedly told that the third party buyers, called "straw buyers", would hold the titles to the homes for a year, pay off the original mortgages and make payments on the new mortgages while the homeowners cleaned up their credit. Instead, the indictment said, the defendants kept excess cash after paying off the original loans.

***

• Five of the defendants -- Maurice McDowall, Andrea Moore, Kerri Clarke, Marina Dubin, and Michael Irving -- were connected to two so-called foreclosure rescue specialist companies called Lost and Found Recovery LLC and Homes R Us USA LLC. The sixth, Alexsander Lipkin, was a mortgage broker for AGA Capital NY Inc. Lost and Found and Homes R Us reaped more than $1.4 million on the loans, the indictment said.

For more, see Six indicted in "foreclosure rescue" in New York.

For other reports, see:

• Gang of foreclosure rescue 'angels' indicted in multimillion-dollar scam (New York Daily News),
• FBI Press Release.

To view the criminal charges and the specifics of the alleged scheme, see Indictment - U.S. vs. McDowall, et al.

For prior post on Maurice McDowall, see NYC Foreclosure Rescue Scammer Target Of Lawsuits; Can't Be Found, FBI Investigating.

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For June 6, 2008 story update, see:

• New York Daily News: Two found guilty in mortgage scam and face 30 years in prison,
• The Associated Press: 2 plead guilty in NY mortgage frauds targeting homeowners.
• North Country Gazette: Two Guilty Of Home Foreclosure Rescue Scheme.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Maryland Man Who Lost Home To Foreclosure Despite Making All Payments Has Appeal Heard

The Baltimore Sun reports:

• Kwaku Atta Poku, the Columbia cab owner who lost his family's townhouse to foreclosure after a refinancing, despite having made every mortgage payment, [got] another chance to present his case [Monday] in Maryland's highest court. In arguments that could change how lower courts handle foreclosure cases, attorneys for the immigrant from Ghana are fighting to overturn rulings in favor of Washington Mutual Inc., the national mortgage company that took and resold his Howard County house in 2005.

***

• Atta Poku is worried that his distant relatives and friends still think he did something wrong, even though Shane Winn, a spokesman for Washington Mutual, has said the company doesn't blame him for the foreclosure. Winn said his firm never received payment for the first mortgage, and Atta Poku was unable to prove it was paid off when he refinanced, partly because crucial financial documents were lost by the financial institutions involved in the transaction.

***

• Phillip Robinson, executive director of Civil Justice, Inc. public-interest law firm, said there is more at stake than one man and his family. "With Atta Poku's case, they'll [Court of Appeals] have an opportunity to reshape the Maryland foreclosure process." Robinson said more people are losing their homes to mortgage companies and banks, and the court can decide if Maryland's foreclosure process "adequately meets various constitutional standards."

For more, see Evicted owner to air appeal (Md. court gets case that could change foreclosure rules) (Baltimore Sun - 12-3-07).

For story update, see (5-4-08) New laws too late in loss of home (Ghanaian immigrant continues struggle, says options limited).

For additional background on this story:

• Foreclosure victim seeks relief from Maryland Court of Appeals (Baltimore Sun - 12-4-07),
• Watch archived webcast of Monday's oral arguments in the Maryland Court of Appeals,
• Links to earlier Baltimore Sun articles on this story,
• Prior posts on this story.

Undercover Sting Nails Three In California Home Theft Try

In San Bernadino County, California, The Press Enterprise reports:

• San Bernardino County district attorney officials arrested three San Bernardino women in an undercover sting last week after they attempted to fraudulently transfer property belonging to a 72-year-old cancer victim from Georgia. District attorney's officials announced Monday that the women were lured to the First American Title office, 303 W. Court St., where they gave undercover investigators a fake license and forged a signature. Kayla Stewart, 47, Lisha Lee, 36, and Valerie Nabors, 26, each were charged with conspiracy to commit forgery, identity theft and financial elder abuse. More arrests are possible, Landrum said.

Source: Three arrested in real-estate case (3rd blurb from the top).

Go here , go here , and go here for other posts on elder financial abuse. yak

KFVS-TV "Housejacking" Investigation Reveals Flipping Scam; 300+ Homes In Foreclosure

(post modified - 12-5-07)
In Sikeston, Missouri, KFVS-TV Channel 12 recently ran a three part investigative report on a home flipping operation involving the now-defunct Century Mortgage and its president, local real estate operator Todd McBride, involving forged deeds, inflated appraisals, home sales to out-of-town straw buyers with promises to supply property management services, etc.

The end result has been: (1) a legitimate property owner filing suit to reclaim title to rental houses that were stolen from him, (2) 40-50 unwitting straw buyers that are heavily indebted with ruined credit, (3) 300+ homes in foreclosure with mortgages far in excess of their value, (4) tenants that are in the process of being "foreclosure evicted," even though they've made all their rent payments, and (5) a city trying to collect on fines for code violations on the homes that have fallen into extreme disrepair and having to bear the cost of cleaning up or even tearing down derelict homes. One straw buyer victimized by the scam reportedly has a warrant out for his arrest due to all the code violations on homes in his name.

The scam came to light when a large number of the homes involved started to get hit with code violations all at the same time.

To watch the KFVS-TV Channel 12 story by investigative reporter Kathy Sweeney:

• Housejacked - Part 1 , Part 2 , Part 3.

To read online highlights of the story, see Housejacked: How it Works, Who's Involved, and Who Got Hurt.

--------------------

For print coverage on this story from The Standard Democrat, see:

• Mortgage fraud scheme: Despite the woes, some walked away winners from foreclosures (Original sellers profited, Scott County earned fees),
• Mortgage fraud scheme: How it worked,
• Mortgage fraud scheme: Families displaced by housing fraud ("Lost in the shuffle").

Go here for other posts on this story.

Wall Street Journal On Credit Worthy Borrowers Steered Into Subprime Loans

The Wall Street Journal reports:

• One common assumption about the subprime mortgage crisis is that it revolves around borrowers with sketchy credit who couldn't have bought a home without paying punitively high interest rates. But it turns out that plenty of people with seemingly good credit are also caught in the subprime trap. An analysis for The Wall Street Journal of more than $2.5 trillion in subprime loans made since 2000 shows that as the number of subprime loans mushroomed, an increasing proportion of them went to people with credit scores high enough to often qualify for conventional loans with far better terms.

For more, see Subprime Debacle Traps Even Very Credit-Worthy (As Housing Boomed, Industry Pushed Loans To a Broader Market) (might require subscription; if no subscription, try here, courtesy of The Denver Post).

Alabama Escrow Agent, Loan Originator Get Jail Time In Straw Buyer Mortgage Scam

In Mobile, Alabama, The Press-Register reports:

• Federal judges in Mobile last week handed down prison sentences to a Mobile County pair who helped pull off a mortgage scheme that investigators said defrauded lenders of more than $1 million. U.S. District Judge William Steele on Thursday sentenced Joycelyn Easter, 50, to two years in prison and ordered her to repay more than $467,000. On Tuesday, Chief U.S. District Judge Ginny Granade sentenced Antonio Devon Harrison to a year and nine months. The ringleader of the plot, Darlene Hill, is scheduled to be sentenced later this month.

***

• Tracy Williamson, who works as a closing agent for Title Assurance Co., where Easter also worked, said her former colleague's actions have threatened the company's insurance. Easter was responsible for disbursing loans provided by Regions Mortgage. [... Harrison] admitted to processing loan applications and submitting them for approval at various financial institutions despite knowing that they were bad deals.

For more, see Pair sentenced in mortgage fraud.

Go here for earlier post on this story.

Prospective Homebuyer Dodges Death In Copper Theft Incident

In Ontario, Ohio, the Mansfield News Journal reports:

• Springfield Township Fire Chief Ron Henry said thieves who cut copper pipes in a vacant house could potentially have caused a fatal explosion. It took firefighters two hours [last week] to clear the home of natural gas from a leak triggered by the theft. [...] “A prospective buyer was opening it up to take a look at the house and smelled the gas and called 911,” Henry said. Copper pipe typically is used for water. However, in that house some copper pipe was being used in the heating system. Thieves “ripped it out,” the fire chief said. By the time the leak was discovered, gas levels were “very high,” he said. “It was unsafe for us to enter.” “If the buyer had went in very far and turned on a light, it could have caused a death,” Henry said.

For more, see Fire chief says copper pipe theft could’ve led to fatal explosion in Ontario (no longer availablle online).

For a story of one property owner victimized by copper theft who wasn't as fortunate as this prospective buyer, see $20 Copper Theft In Vacant Home Leads To Owner's Death.

For other stories on stolen copper, see Copper Thefts I and Copper Thefts II. copper metal theft zebra

The Fleecing Of Frances Taylor

In Seattle, Washington, The Seattle Times reports:

• Seven years ago, Frances Joy Taylor was living in her own house, singing in her church choir and baking apple pies for friends. The 89-year-old widow had about $2 million in assets — which she intended to leave to her church to help children in Africa. Today, Frances lives at an adult-care home and spends her days napping in front of a television. Her care is paid for largely by taxpayers, because Frances is now bankrupt. Frances' memory is fading as fast as winter daylight, the result of a steady assault by Alzheimer's over the past eight years. Her financial demise began around the same time, when a businessman named Tyrone Dash took over her affairs.

For more on how a now-96 year old Alzheimer's patient had her mortgage-free home and other assets scammed from her, see The fleecing of Frances Taylor.

For other recent articles from The Seattle Times related to this story, see:

• Homeowners in debt, seniors prime targets of riskiest loans,
• Investigation reveals exploitation of vulnerable.

Go here , go here , and go here for other posts on elder financial abuse. yak elder financial abuse

Judges Begin To Hammer "Foreclosure Mill" Law Firms For Trampling On Homeowners' Rights

In a recent article that should be "must reading" for any judge (state or Federal) who presides over foreclosure cases, The Wall Street Journal reports:

• Law firms handling thousands of foreclosure cases on behalf of mortgage lenders and servicers are drawing criticism from judges, who say roughshod filing practices are trampling borrowers' rights.

***

• Lately, judges are faulting law firms for what has become a common practice: filing a foreclosure suit, in states that require them, without showing proof that the plaintiff actually holds the mortgage and has the right to foreclose. (Such plaintiffs are often banks that act as trustees for investors of securities backed by mortgages.) The situation occurs in part because mortgage documents and the contracts between borrowers and lenders may change hands multiple times and may not be assigned to the plaintiffs at the time the suits are filed.

In addition to the recently reported dismissal of foreclosure actions by Ohio Federal judges for lack of proper paperwork, WSJ reports three separate incidents where law firms were fined $65,000, $75,000, and $125,000 by judges in foreclosure actions for what amounts to "playing fast and loose" with the court system. There's also a fourth incident reported where a judge is currently considering imposing sanctions on the attorney.

For more, see Judges Tackle 'Foreclosure Mills' (High-Volume Firms That Cut Corners Are Rebuked, Fined) (subscription required; if no subscription, try here).

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here and Go Here. missing mortgage foreclosure docs alpha ForeclosureMillAttorneysAlpha

Criminal Investigation Targets Twin Cities Area Mortgage Company

In Hennepin County, Minnesota, the Minneapolis Star Tribune reports:

• Hennepin County investigators are probing mortgage fraud complaints involving a Brooklyn Park mortgage company that allegedly used straw buyers to buy property at inflated prices. The county is investigating Universal Mortgage and several of its employees, according to a search warrant affidavit filed by a county investigator.

• Universal's practice of using straw buyers was detailed by the Star Tribune in June. One of those straw buyers was a 22-year-old exotic dancer who said she bought 10 properties through Universal; she's now cooperating with the county attorney's office, according to the affidavit. She and four other buyers whose experiences are detailed in the affidavit said they purchased a total of 25 properties through Universal.

***

• The affidavit was written in support of a search by investigators of records of property dealings involving Universal and several related companies. Also sought were property records involving Donald Walthall, Universal's owner; Andre Bellfield, a former employee; and Marlon Pratt, who also worked at Universal. Walthall didn't return a call and the others couldn't be reached for comment.

For more, see Mortgage firm is focus of Hennepin Co. fraud probe (Hennepin County is investigating Universal Mortgage of Brooklyn Park and several of its employees).

For a related June, 2007 article on this story, see see 'Straw buyer' deals fuel tidal wave of foreclosures (Real estate speculators out for profit can manipulate the system, experts say. A woman says she fell victim to a Twin Cities scheme).

Go here for other posts on the alleged Universal Mortgage straw buyer, home flipping scams.

---------------

In a related Federal civil racketeering (RICO) lawsuit brought against Universal Mortgage, Andre Bellfield, and Marlon Pratt by Homestead Mortgage Company, a motion is currently pending seeking a default judgment against Andre Bellfield for approximately $700,000. It appears from Federal Court records that Bellfield has either left town, gone into hiding or has otherwise made himself scarce because the process server in this case couldn't find him to serve him with the legal papers. Homestead Mortgage was forced to serve him with notice of the lawsuit by taking out a legal notice in a newspaper. Go here for information on the pending motion for a default judgment against Andre Bellfield.

For copy of Federal racketeering lawsuit, contact me at HomeEquityTheft@yahoo.com and I'll e-mail it to you (be sure and put "Homestead Mortgage vs. Universal Mortgage, Pratt and Bellfield" in the subject line).

Minnesota Feds Investigating Mortgage Company Linked To Suspicious Deals

In Minneapolis, Minnesota, WCCO-TV Channel 4 reports:

• Newly-released documents confirm that the FBI is investigating [TJ Waconia,] a Roseville, Minn. company for alleged mortgage fraud. The case involves hundreds of properties in several counties. If the allegations are proven, it would be one of the largest cases of its kind in the metro.

• "The number of people involved in the scheme was really very large," said Barbara Johnson, President of the Minneapolis City Council. Johnson said for too long she had been hearing from neighbors on the north side who were concerned about real estate transactions involving the same investment company. Documents and data were compiled for months then Johnson looked for someone willing to look into the complex case.

Johnson said she "shopped" her information around to state and local prosecutors before finally getting the FBI to take the case. Complaints of boarded-up foreclosures throughout the area from her constituents compelled her to take action. For more, see FBI Investigates MN Mortgage Company For Fraud. Go here for the WCCO Channel 4 video coverage.

See also, FBI targeting Roseville company in fraud case (Minnesota Public Radio).

Ohio House Flipper Gets 2 Years For Using Phony Docs To Scam HUD

In Columbus, Ohio, The Columbus Dispatch reports:

• A former Bexley real-estate agent who made millions selling homes in the Hilltop and North Linden areas using false credit documents was sentenced yesterday to two years in prison. Steven E. Winter, 45, was convicted of filing a false federal income-tax return and using false documents to defraud a federal housing agency. Winter sold more than 170 properties from 1997 to 2004 at an average markup of 85 percent. He was sentenced yesterday by U.S. District Judge John D. Holschuh to 24 months in prison and three years of supervised release.

***

• Winter attracted many low-income, first-time buyers with ads reading "$500 GETS KEYS." Dozens of the homebuyers ended up in foreclosure. Of those, 22 bought homes with mortgages guaranteed by HUD. As a result, HUD's insurance has paid lenders more than $1.6 million when Winter's buyers defaulted. In a 2004 Dispatch story, several buyers said Winter had altered their loan applications and that they paid far more than the homes' appraised values.

For more, see House flipper sentenced for fraud.

Wall Street Journal On Investigations Of Possible Phony Claims By Mortgage Servicers & Lenders In Homeowners' Bankruptcy Cases

The Wall Street Journal is the latest to chime in on reports that mortgage servicing companies and lenders, when claiming amounts owed from homeowners in bankruptcy, are submitting inflated amounts to the bankruptcy court, and are allegedly engaging in questionable practices in the handling of homeowners' mortgage payments. The Journal reports:

• Attorneys from the U.S. Trustee Program, a division of the Justice Deparment, have taken aim at mortgage lenders, servicers and their lawyers in at least six states, including Georgia, Massachusetts and Pennsylvania, since last year, according to court records. The agency is probing representations made to courts about what homeowners owe and the handling of their payments during bankruptcy, both areas in which consumer advocates say there are pervasive problems.

(Editor's note: While the concerns being expressed lately relates to servicers' and lenders' claims and conduct occurring in the context of homeowners' bankruptcy cases, equal concern should also be directed to similar claims and conduct when servicers and lenders file non-bankruptcy, foreclosure lawsuits against homeowners, which are currently flooding the court system.)

For more, see U.S. Expands Scrutiny of Home Lenders (subscription required; if no subscription, try here - then click link for the article).

Go here, Go here and Go here for more on recent Countrywide problems with consumers.

For more on allegedly false claims being made by home lenders and mortgage servicing companies both in bankruptcy and non-bankruptcy proceedings, see:

• Foreclosure Charges by Lender Investigated (New York Times - 11-28-07) (may require subscription; if no subscription, try here).
• Borrowers Face Dubious Charges in Foreclosures (New York Times - 11-6-07) (may require subscription; if no subscription, try here),
• Bankruptcy Trustees Taking Action Against Dishonest Lenders, (Warren Reports On The Middle Class),
• Countrywide Subpoenaed; Possible False Foreclosure Claims Against Homeowners Being Investigated,
• Homeowners In Foreclosure Being Clipped For Illegally Inflated Legal & Appraisal Fees, Says Lawsuit,
• Fairbanks Capital Screwing Mortgage Lender Too, Says Lawsuit,
• Class action lawsuit - Trevino vs. Mortgage Electronic Registration Systems (aka "MERS"),
• Lawsuit - Ellington Credit Fund, Ltd. vs. Select Portfolio, Inc., et al., available online courtesy of Michael Dillon and GetDShirtz.com.

Disbarred Florida Attorney To Plead Guilty To Misleading Lenders; Swiping Loan Proceeds From Foreclosure Rescue Transactions

This is a story that even a yet-to-be criminally charged foreclosure rescue operator named ARO Properties Corp. (who has been referred to by Federal prosecutors as a co-conspirator in an equity stripping operation) was screwed over by a now-disbarred attorney it hired to oversee dozens of Central Florida real estate transactions in a so-called "Fresh Start Lease Back" home rescue program for homeowners facing foreclosure. The St. Petersburg Times reports:

• Disbarred Clearwater lawyer Graham Kligerman is scheduled to plead guilty this month to federal charges of stealing more than $1-million in a multistate equity-skimming fraud. [...] Two years ago, the Florida Supreme Court [in a separate, unrelated incident] disbarred Kligerman. In its complaint against him, the Florida Bar said he diverted money from one of his practice's trust accounts.

***

• Now prosecutors say that at that time Kligerman was involved in a real estate scam with two co-conspirators from California. Federal prosecutors accuse Kligerman of diverting money from the fraudulent real estate transactions' trust accounts without the knowledge of his co-conspirators. Over two years, Kligerman acted as the closing agent on about 60 fraudulent real estate transactions in which banks were misled into making millions of dollars in loans, prosecutors say. And without the knowledge of two co-conspirators in California who hired him to oversee the transactions here, Kligerman diverted at least $1-million from trust accounts to himself and unwitting clients of his practice, authorities say.

***

• [Kligerman's attorney] said his client has taken responsibility and is cooperating with prosecutors investigating the two co-conspirators [the foreclosure rescue operators]. [...] The federal complaint states that as part of the real estate scheme, the conspirators used false representations to obtain loans from banks and homes from people facing foreclosure. The main aim of the scheme, prosecutors said, was to strip the homes - most in Florida, a few in Georgia - of their equity.

• ARO [the California-based foreclosure rescue operator named as a co-conspirator] advertised a product called "Fresh Start Lease Backs." The company found homeowners who could not make payments on their mortgages but had a lot of equity in their homes, according to prosecutors. ARO then found investors to supposedly buy the homes, lease them back to the original homeowners and eventually sell the properties back to them.

• But banks were not told the real arrangement of the transactions, prosecutors said. The banks were not told that the down payments were being provided by the co-conspirators, not the loan applicants. The down payments that swayed the banks to make the loans came from the equity of the actual homes, prosecutors allege. Nor were the banks told that the buyers had no plans to live in the homes as their applications claimed. The buyers were unsophisticated investors with good credit who paid ARO $2,500 to be buyers, according to the complaint. They unwittingly submitted fraudulent loan applications.

Kligerman's plea agreement requires him to pay a yet-to-be determined amount of restitution to at least two loan processors, four banks, 53 homeowners and 18 unwitting straw buyers. For more, see Disbarred lawyer to plead guilty to fraud (Prosecutors say Graham Kligerman misled banks into making millions of dollars in loans).

For story update, see Former Lawyer Cuts Plea Deal In Real Estate Scam (Disbarred Clearwater lawyer Graham Kligerman pleaded guilty on Tuesday (12-17-07) to conspiracy and wire fraud, admitting he stole millions in a real estate scheme).

Go here for a description of ARO's Fresh Start Lease Backs program (no longer available online).

To view the relevant federal court documents in this case:

• Criminal Complaint (Information) - U.S. v. Kligerman, or

• (PACER registration required) go here for the Criminal Complaint (Information) filed by prosecutors (13 pages - $1.04), and here for the Plea Agreement (22 pages - $1.76; the admitted facts of the scheme are found at paragraph B-9, pages 19-21).

For more on Graham Kligerman, see:

• Disbarred Florida Attorney Gets 10 Years For His Part In Alleged Sale Leaseback, Foreclosure Rescue Scam That Defrauded 50+ Homeowners,
• Disbarment yields a case of frustration (A Largo woman must start her case from scratch after hiring a lawyer who had been facing misconduct charges) (St. Petersburg Times),
• Florida Supreme Court Disbarment.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Southeast Queens: "Ground Zero" In NYC Foreclosure Crisis

In New York City, Crain's New York Business reports:

• In mid-2006, Suzette Francis was homeless with two young children and a third on the way. She earned just over $300 a week as a security guard. But she had a decent credit score, and her real estate broker told her that was enough for her to buy a $450,000 two-family home in Jamaica, Queens. In December, Ms. Francis left the shelter where she had been living and moved in. Foreclosure proceedings began immediately.

• "I couldn't make a single payment," says Ms. Francis, 31. And no wonder: The monthly payment was $2,000 more than her income from her job and the rent from her tenant.

• Ms. Francis' case, though extreme, doesn't surprise anyone familiar with subprime lending in southeast Queens, where shady home loans have led to an onslaught of foreclosures this year. The seizure of hundreds of houses threatens to destabilize blocks, drive down property values and damage the community's economy, say city officials and civic leaders.

For more, see Jamaica area is ground zero of foreclosure crisis (Leads in high-cost loans; hundreds of borrowers victims of predator schemes).

Illinois AG Files Suit Against Alleged Equity Stripping / Home Repair Scam Operation

From the Illinois Attorney General's Office:

• [Illinois] Attorney General Lisa Madigan continues to lead the fight against mortgage and home repair fraud [last week] by filing two lawsuits against mortgage brokers who sold complex mortgages to Illinois consumers. These suits are the first lawsuits filed by the Attorney General's Office focusing primarily on the origination of mortgage products that have played a major role in the series of events leading to the current subprime mortgage foreclosure crisis. [Last week's] filings follow a number of lawsuits filed by Madigan targeting the subprime mortgage crisis, including eight suits against mortgage rescue scam artists that prey upon homeowners threatened by foreclosure. [...] In one of the suits, it ... is alleged that homeowners were lured into mortgages by promises of grants from government-sponsored home repair programs. In fact, the government-sponsored home repair programs were completely fictitious. The homeowners never received grants or home repairs completed to their satisfaction.

In the lawsuit involving the alleged equity stripping home repair scam, Dayton D. Vickers Ellis, aka Dale Ellis, and his companies are accused of, among other things, sending direct mail solicitations advertising phony government programs, requiring mortgage applications from the homeowners that were purportedly part of the government grant process, and in many instances, having money disbursed from mortgage proceeds to his company without either having started or completed the home improvements contracted for. For more, see the Illinois AG Press Release - Attorney General Files Lawsuits Against Two Chicago Area Brokers to End Fraudulent Mortgage Lending and Home Repair Schemes.

102 Troubled Properties, $62M+ In Mortgages Tied To One Bakersfield Group Under Investigation

In Bakersfield, California, The Bakersfield California reports:

• Carl Cole, former managing broker of now-defunct Crisp & Cole Real Estate, counted his first two foreclosures Thursday, trustee's deeds recorded with the county show. They are so far the only foreclosures in the Cole family, but just a pair among more than 100 defaulted and foreclosed properties associated with the former company's employees, family members and associates, according to an ongoing Californian tally. Federal investigators are currently looking into Crisp & Cole operations for possible mortgage fraud after a federal raid of 13 Bakersfield sites Sept. 12.

***

• As of Thursday, 102 troubled properties with more than $62.3 million in total loans can be pegged to former Crisp & Cole associates, according to The Californian's ongoing tally. Of those, at least 57 have so far foreclosed. On Monday, the Seven Oaks mansion of Cole's former partner, David Crisp, is scheduled for the auction block.

For more, see First of Cole's properties foreclosed (David Crisp's mansion set for auction Monday).

Go here for other posts and links to stories on the David Crisp / Carl Cole alleged flipping operation.

CNN On Tenants Losing Their Homes Due To "Foreclosure Eviction"

CNN.com reports:

• Alice Mills signed her lease in February, thinking she would have a nice place to stay for the next year, until she could make her way into a senior citizens' community. [...] Then in July, Mills got a rude surprise when she came home from a hospital stay to find a sheriff's notice on the door, saying the house had been foreclosed and she must call about being evicted. Mills says her landlord told her not to worry because he would "take care of it," so she ignored other letters and notices that came to the apartment. Not until a sheriff's deputy showed up on November 13 did Mills take the eviction notices seriously. He told her she had to be out of the house the next day.

For more, see Foreclosure fallout: Renters forced out of lost homes.

Go here to watch CNN video report, Evictions surprise renters (CNN's Gerri Willis reports on why renters are becoming victims of the mortgage crisis).

For similar posts involving rent-skimming landlords who pocket rent and allow homes to go into foreclosure, see Tenants Unwittingly Renting Homes In Foreclosure I , II , III , and IV; and "Rent To Own" Scams I. equity skimming unwittingly gamma

Michigan Foreclosures Stressing Tenants, Social Service Groups

In Holland, Michigan, WOOD-TV Channel 8 (Grand Rapids) reports on an elderly tenant who uses an oxygen tank and was diagnosed with a debilitating case of diabetes who is being forced out of her rented home as a result of her landlord's failure to make the mortgage payments; and the stress being felt by a local social service organization as a result of the wave of foreclosure evictions.

• "This is a new kind of homeless - those that are the innocent victims," said Darryl Bartlett, the executive director of the Holland Rescue Mission for Women. "Now to hear that subprime lending has affected our people, yeah, this is a first." Can shelters like this one, with an annual budget of $2 million, handle the influx of a new category of homeless? "We did not plan for large numbers of people who are being foreclosed on becoming homeless. That was not in our plan," adds Bartlett. "We will try to put more people into these spaces and try to do it in a more efficient way."

For more, see Foreclosure forces renter out, or here to view the WOOD-TV Channel 8 video coverage.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here, or here. equity skimming unwittingly gamma

Receiver Takes Control Over Minnesota Builder's Assets

In Minnesota, the Minneapolis Star Tribune reports:

• U.S. District Judge Ann Montgomery appointed a receiver Thursday to take control of the remaining assets of the Parish Marketing & Development Corp. of Eagan, which pleaded guilty in a giant mortgage-fraud conspiracy that roiled several southern Twin Cities suburbs. Gary Hansen, an attorney with the Minneapolis law firm Oppenheimer, Wolff and Donnelly, will assume control of the home builder's business operations, preserve and manage its assets, and oversee their sale for the benefit of victims and creditors.

For more, see Court-appointed receiver will dispose of Parish Development (A Minneapolis lawyer is overseeing the sale of an Eagan firm involved in mortgage fraud).

Go here for other posts on Minnesota homebuilder Parish Marketing and Development.

Michigan Cops Express Crime Concerns Due To Foreclosures & Vacant Homes

In Lansing, Michigan, the Lansing State Journal reports on the concerns local cops have on the increase in vacant homes in the area, many attributable to the increase in foreclosures. Excerpts from the story:

• [R]egarding crime and vacant homes in the Capitol area, Lansing police Lt. Bruce Ferguson said the city has "been addressing that issue for quite some time." "We understand that if you allow these homes to fall into disrepair ... it could increase crime in your neighborhood," he said. And that means instances in which vacant houses in Lansing are broken into, turned into drug houses and used to store stolen property. It also creates an, "If nobody cares about these homes, why should I care?" attitude, Ferguson said.

***

• Detective Sgt. Matthew Flint of the Ingham County Sheriff's Office said crime related to vacant homes hasn't been much of an issue in the rural areas of the county, but in suburban areas, "it's not uncommon." When homes become vacant, he said, the grass gets longer, the bushes grow thicker, and criminals have more cover to break into homes. A particular problem, Flint said, is that thieves break into vacant homes to strip and steal copper from wires and hot water conduit to be sold as scrap.

• "Vacant homes are big targets for scrap thieves," Flint said. "My experience as well is that these vacant homes become hangouts for kids. They can sneak in, get out of the elements, and do what kids do."

Reportedly, a recent study concluded that when the foreclosure rate increases 1 percentage point, neighborhood violent crime rises 2.33 percent. For more, see Foreclosures bring not only blight, but crime (And the problem isn't limited to low-income areas). copper metal theft zebra

Detroit-Area Columnist: "Mortgage Lending Turned Into A Michigan Carnival Act"

A columnist in The Detroit News comments on the wreckage left in southeastern Michigan by the real estate boom and crash - how it happened, why state officials looked the other way and are now doing nothing about it. Excerpts from the column:

• Once a boring and staid business, mortgage lending turned into a Michigan carnival act. Now, as my colleague Ron French so vividly describes in his powerful series this week, southeastern Michigan is a kingdom of foreclosure, a place where yesterday's dream houses are today's vacant, marked down shells. Detroit's neighborhoods are hardest hit. But foreclosures are as common as crabgrass in the suburbs too, easy to spot in every neighborhood from Grosse Pointe to Bloomfield Hills to Oakland Township.

For more, see Mortgage fraud gets attention too late.

See also, Lax oversight spurs foreclosures (Loan officers not licensed) (The Detroit News).

Two (Now Disbarred) New York Attorneys Charged With Client Ripoffs Totalling About $200K

From the Queens County, NY District Attorney's Office:

• Queens District Attorney Richard A. Brown announced [Wednesday] that two attorneys have been charged separately with looting their respective escrow accounts and failing to return money they had been holding for clients. District Attorney Brown said, “According to the charges, the defendants not only violated the trust that their clients placed in them but they let down the entire legal system which counts on members of the bar to conduct themselves in an ethical matter. Each of the attorneys has been disbarred, and each now faces serious criminal charges.” District Attorney Brown identified the defendants as Arelia Taveras, 46, presently of Bloomington, Minnesota, and Mark Jacobs, 58, of Glen Head, New York.

The alleged thefts took place primarily in connection with real estate transactions. For more, see the Queens DA Press Release - Two Queens Attorneys Charged With Raiding Their Escrow Accounts And Stealing Nearly $200,000 From Clients.

For those ripped off due to dishonest conduct by a New York attorney and are trying to recover some or all of your loss, see The Lawyers Fund for Client Protection of the State of New York for more information.

For other states, see:

• Directory Of Lawyers' Funds For Client Protection (American Bar Association - November, 2007);
• Check the USA Client Protection Funds Map; or
• try this "Google" search. sneaky slick escrow agents beta

Queens DA Charge 4 In Mortgage Scam Involving I.D. Theft Of Dead Person

In New York City, Queens District Attorney Richard A. Brown and others recently announced criminal charges against four individuals with, among other things, artificially inflating the price of a Queens house by “flipping” the property before stealing the personal identity of a dead Queens woman to fraudulently take out nearly $500,000 in mortgage loans on the property. According to the DA:

• In this particular case, the defendants are accused of sucking hundreds of thousands of dollars in equity out of a Queens house through financial chicanery before walking away and allowing the property to fall into foreclosure.

Those charged are Seerojnie Mohan, 40, of Roslyn, Long Island, and Carolyn Dixon, 49, Doodnath Siewsanker, 48, and Ramesh Hardial, 43, all of Queens.

For more, see Queens DA Press Release - Allegedly Provided Illegal Alien With Social Security Number, Used “Straw Buyer” To “Wash” Title and Stole Identity of Dead Woman to Take Out $500,000 in Mortgage Loans.

Illinois AG Sues Contractor For Allegedly Performing Shoddy Work

From the Illinois Attorney General's Office:

• [Illinois] Attorney General Lisa Madigan [yesterday] filed a lawsuit in Madison County Circuit Court alleging that an Alton contractor collected approximately $27,000 in down payments for home improvement work that he failed to perform or completed in a substandard manner. Madigan's suit, against Gary Delp of River Bend Building and Contracting ... in Alton, stems from complaints that five consumers made to the Attorney General's Consumer Fraud Bureau. The consumers alleged that Delp entered into verbal contracts to install sewer lines and other home improvements. According to the consumers' complaints, Delp collected down payments ranging from $2,500 to $2,900 and then allegedly failed to perform the work or conducted the work in a substandard manner.

Illinois consumers who believe they have been screwed over in a home repair scam or any other consumer fraud can download a complaint form or call the Attorney General's Consumer Fraud Hotline at one of the numbers in the Illinois AG Press Release.

For more, see Illinois AG Press Release - Madigan Sues Alton Contractor For Failure To Fulfill Home Improvement Contracts.

Beware Of Homes Used As Indoor Pot Farms & Meth Labs

Some time ago, the San Francisco Chronicle ran two stories describing the potential problems that may arise from the use of homes / apartments by its occupants as marijuana grow houses and methamphetamine labs.

Whether it's mold, corroded pipes, ripped out interior walls, substandard / illegal alterations to the electrical system that create fire hazards, the production and dumping of toxic waste, toxic vapors that penetrate drywall, electrical conduits, wood and flooring, decontamination issues, financial responsibility for the clean-up, legal liability issues, and the "invisible legacy" that's left in the home for future occupants, the stories describe the health, safety, legal and financial concerns that may be of interest to landlords, property managers, current homeowners, and prospective homebuyers, not to mention the mortgage lenders whose loans are secured by affected homes, and the neighbors living near those homes and apartments used as indoor pot farms and meth labs.

In one account, a fire department discovered a meth lab in one unit of an apartment building when responding to a kitchen fire. Reportedly, the entire building had to be evacuated of its tenants and closed down for "clean up" -- which took about six months. For more, see:

• Hard to just say 'no' to marijuana-growing tenants,
• Homes once used as meth labs can leave an invisible legacy.

Go here for some methamphetamine information resources.

Go here and go here for other posts on home based meth labs. meth lab zeta pot grow ops alpha

Builder Busted In Treasure Coast Indoor Pot Farm Raids; Mortgage Fraud Charges Possible

In Port St. Lucie, Florida, the Palm Beach Post reports:

• A small Port St. Lucie home builder appears to be at the center of an investigation into a ring of marijuana grow houses that sprawled across St. Lucie County, where authorities on Tuesday raided 18 homes and seized 420 pounds of pot, officials said. Authorities said they arrested 10 people, including the owner of Global Home Builders of the Treasure Coast, and uncovered 10 indoor marijuana farms during pre-dawn raids. They also said they confiscated $57,000 cash, 38 grams of cocaine, four guns, nine cars and a boat. The investigation began in September, and resulted Tuesday in what Port St. Lucie Police Chief John Skinner called the area's biggest single-day bust of indoor marijuana farms.

For more, see Builder arrested in raids at pot farms. See also, 10 more houses raided for pot in PSL (TC Palm).

A WPEC-TV Channel 12 story reported that mortgage fraud charges may also be coming in connection with the homes that were raided. To watch the video coverage, see Grow House Bust (WPEC-TV Channel 12) and Video: Police arrest 10 people in raids of alleged marijuana grow houses (St. Lucie County Sheriff's Office).

For story update, see Mortgage Fraud Charges Tacked On To Three Suspects Facing Charges Of Running 10 Indoor Florida Pot Farms. pot grow ops alpha

Indoor Pot Farms "Sprouting Up" Throughout Northeast Ohio

WKYC-TV Channel 3 (Cleveland, Ohio) recently ran a story on the apparent explosion of marijuana grow houses in the heart of suburbia throughout Northeast Ohio. Reportedly, suburban homes where people don't expect crime and respect neighbors' privacy are the perfect cover for these operations. To view the Channel 3 video report, see Indoor marijuana farms popping up in suburban neighborhoods.

Go here to read the WKYC online story. For earlier WKYC stories on indoor pot farms in Northeast Ohio, with links to the video coverage, see:

• Marijuana harvest times keeps law enforcement busy (9-26-07),
• Police raid another indoor pot growing operation; hundreds of drug plants seized (6-29-07). pot grow ops alpha

Florida Halts Withdrawls From Municipal Investment Fund; Cities Spooked By Level Of Subprime Junk Investments

In Florida, the South Florida Sun Sentinel reports:

• In an effort to halt what one official called "an investment world version of a run on the bank," state officials froze withdrawals Thursday from a $27 billion investment fund that local governments drained by almost half during the past two weeks.

***

• The state-run program allows local governments and agencies to combine revenues in short-term investments at low financing costs, while earning interest with easy access to the money to pay bills. Earlier this month, the state notified local finance directors that some investments were exposed to sub-prime mortgage risk.

***

• The freeze, in effect until Tuesday, was ordered by the State Board of Administration, composed of Gov. Charlie Crist, Chief Financial Officer Alex Sink and Attorney General Bill McCollum. The SBA, which manages the fund that on Nov. 15 held about $27 billion, was left with a little more than $14 billion Thursday night.

For more, see State freezes 'run on the bank' at investment fund (when link expires, try here).

For yesterday's post on this story, see Some Municipal Governments Bailing Out Of Subprime Investments.

For a related story from Bloomberg, see Public School Funds Hit by SIV Debts Hidden in Investment Pools (11-15-07).

Bay Area Resident Facing Foreclosure Gets Nothing In Sale Leaseback Of Home; Sues Foreclosure Rescue Operator

In San Francisco, California, the San Francisco Chronicle ran a story on an area homeowner facing foreclosure and her experience with foreclosure rescue operator, Diversified Management Consultants, a Sacramento company. With her home loan in default and a leaky roof, she reportedly entered into a sale and leaseback arrangement with this company in which: (1) she would receive up to $100,000 from the home sale, (2) her rent would be half of her mortgage payment, (3) she'd get assistance in improving her credit score, (4) she'd have the chance to make money referring other people for similar lease-back plans, and (5) she was assured that she'd be able to buy back here home after two years. She said that the promised benefits didn't happen and that she signed away her house and got nothing.

Excerpts from the story:

• [The homeowner] thinks she fell victim to a classic foreclosure rescue scam. She has filed a civil suit against the investors alleging that they used "predatory bait-and-switch tactics ... designed to take both her money and her home."

***

• Public records show the new deed holder refinanced [the homeowner's] house with new mortgages totaling $698,000. That's $170,000 more than the $528,000 Bridgewater said she owed. In a typical sale, [she] would have received that $170,000 minus fees and commissions. Instead, fees and costs exceeding $165,000 were disbursed from the mortgages, her lawsuit said. The only item that directly benefited [she] was a new roof, valued at about $6,600.

• A week after [the homeowner] signed over title, the investors said her monthly rent to stay in the house would be $2,900 - almost double what she had told them she could afford.

Assisting her with her lawsuit against the rescue operator and others is the Predatory Lending Clinic at the University of San Francisco, and the San Francisco law firm Liuzzi, Murphy & Solomon.

For more, see Enticing deals in the mortgage crisis often are too good to be true.

More On Local Judge's Involvement In North Jersey Home Flipping Scam

In a story posted this morning, the New Jersey Law Journal reports:

• A Garfield, N.J., lawyer who is also the town's judge may have played a central role in a scheme to defraud lenders by obtaining mortgages based on inflated appraisals of run-down properties. A state civil suit points to Garfield solo [practitioner] William Colacino Jr. as the lawyer referred to in a federal criminal case as "W.C.," an unindicted co-conspirator whose legal services, law office, attorney bank accounts and legal assistant were allegedly used in the scheme.

***

• The criminal scheme is laid out in an information charging Paramus, N.J., real estate agent Michael Eliasof with ... conspiring with 12 others to engage in monetary transactions involving more than $10,000 derived from wire fraud, with the object of laundering proceeds of fraudulently obtained mortgage loans.

***

• The civil suit, Beggs v. Eliasof, L-2343-06, filed in Passaic County Superior Court last year, sues Colacino by name, along with Eliasof, for misrepresentation, fraud, unjust enrichment, malpractice, consumer fraud and negligence in connection with the purchase of four investment properties in 2004 and 2005, three in Paterson and one in Newark. Colacino allegedly handled the closings while Eliasof allegedly made false promises about repairing and managing the properties and paying off the mortgages. Other defendants include Paterson Management, identified in the criminal information as controlled by Eliasof and used in the flipping scheme, and William Ottavian, who allegedly held himself out as a licensed appraiser with a Pine Brook, N.J., company.

For more, see Lawyer-Judge May Be at Center of Land-Flip Fraud.

Go here for other posts on this story. naughty judges

NBC Nightly News On Nationwide Copper Theft Epidemic

The NBC Nightly News ran a story last night on the nationwide copper theft epidemic. Copper parts being ripped off from inside air conditioners, plumbing pipes taken from day care centers, wiring taken from lighting fixtures at Little League baseball stadiums, and construction sites being nailed are among the targets for copper thieves that has law enforcement agencies throughout the country with their hands full.

To watch the NBC report, see Hot copper: A surge in copper thefts nationwide is costing businesses billions of dollars. NBC's Peter Alexander reports from Las Vegas, Nevada.

Go here for other posts on Copper Thefts. copper metal theft zebra

Some Municipal Governments Bailing Out Of Subprime Investments

(revised 11-30-07)
In Florida, the South Florida Sun-Sentinel reports:

• The nation's subprime mortgage crisis is prompting Florida cities, counties and agencies ... to pull billions of dollars out of a state-run investment fund. The local governments are worried because a state agency has invested their money, plus billions of additional dollars, in funds that are backed by subprime mortgages, the risky loans that have triggered an international credit crunch.

***

• [An Orange County, Florida official] said his office took its money out because the state was evasive when questioned about how much was invested in subprime funds and how stable those funds were: "One of the problems is transparency. We haven't been satisfied with the answers we've been given."

For more, see Sub-prime mortgage meltdown causes run on state-managed investment fund (Agencies pull out of state-run fund) (if link expires, try here).

See also, Orlando, Orange County yank millions from state fund (Orlando Sentinel): Reportedly, the Seminole County, Florida school system is so spooked about the subprime junk holdings held by Florida's state-run investment fund that it yanked almost its entire amount on deposit (about $100 million) with the fund. It left $1,000 in the account just to keep it open (if link expires, try here).

Observation: It sounds like those Florida municipalities slow to pull their cash out from this fund may be left "holding the bag."

For story update, see State freezes 'run on the bank' at investment fund (added 11-30-07) (if link expires, try here).

For a related story from Bloomberg, see Public School Funds Hit by SIV Debts Hidden in Investment Pools (11-15-07).

Mastermind Of "Wraparound Mortgage" Ponzi Scheme Pleads Guilty; Fraud Estimated At $29M

In a Federal Court in Harrisburg, Pennsylvania, Lancaster Online reports:

• Wesley A. Snyder was visibly shaken and his voice cracked Wednesday as he waived his rights in federal court here, pleaded guilty to one count of mail fraud and admitted to engineering a mortgage scheme that defrauded more than 800 clients and investors of an estimated $29.2 million. About 60 of Snyder's victims packed the standing-room-only courtroom.

For more, see Mortgage broker pleads guilty (Snyder admits fraud; victims want redress).

Go here for an illustration of how the refi / wraparound mortgage scam works.

Go here and go here for other posts and links to earlier media reports on the Pennsylvania Ponzi scheme involving OPFM, Image Masters, and other companies operated by Wesley Snyder.

NYC Foreclosure Rescue Operator Is At It Again, Back In The News, Being Sued Again, & Under Criminal Investigation

(original post 11-28-07)
Home Savers Consulting Corp., a Brooklyn, New York-based foreclosure rescue operator is back in the news. This time, it's WABC-TV Channel 7 (New York City) that ran a story the other night featuring two more scam victims who unwittingly went to Home Savers for help when they were facing foreclosure. Instead of help, they got their homes sold from out from under them. In addition to the homeowners facing foreclosure, Channel 7 investigative reporter Sarah Wallace also spoke on camera to a couple of the straw buyers that Home Savers hired and were involved in the scam. They claim that they were unwitting participants in the scam as well.

Reportedly, the Home Savers' business office suddenly closed and Garth Celestine, one of the Home Savers' partners, has apparently gone into hiding, which is understandable because, in addition to a number of civil lawsuits filed against Home Savers, criminal investigations in two states are ongoing, according to Channel 7.

To stave off possible foreclosure, one victim has now filed for bankruptcy and the other is considering it.

One of the victims has brought a civil lawsuit against Homesavers and others, alleging a widespread conspiracy of fraud. To read the online transcript of the Channel 7 TV report, see A Home Mortgage Mess.

Go here to watch the WABC-TV Channel 7 report.

Go here for other posts on Home Savers Consulting Corp.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Cleveland Area Builder & Straw Buyer Sentenced In Fraud Scheme Involving 38 Houses & $15M+ In Fraudulently Obtained Loans

In Cleveland, Ohio, WKYC-TV Channel 3 reports:

• Two people were sentenced to prison Tuesday in connection with what prosecutors describe as a mortgage fraud scheme in upscale Cleveland suburbs. Builder and developer, Edward Emery received a sentence totaling 34 months and a fine of $10,000. Emery admitted that he would nearly finish half million dollar homes, then set up an arrangement where people would get paid for work that was never done. Eloise Anderson will spend nearly a year in prison. Prosecutors say she signed a loan application with fraudulent information. She's been ordered to pay $35,000 in restitution. Prosecutors say the mortgage fraud scheme totaled $15,115,440 and involved 38 houses in Solon and Glenwillow. Twenty-seven of the homes went into foreclosure.

For more, see Two sentenced in connection with mortgage fraud case.

Go here to view WKYC-TV video report.

Go here for earlier posts on this case.

Southern California Realtor Associations Plan Publicity Campaign To Heighten Public Awareness Of Real Estate Fraud

In Southern California, The Californian reports:

• The stepped-up efforts of two Realtor associations to fight real estate fraud will include a novel twist: a varied publicity campaign aimed at buyers, sellers, agents, authorities and the news media, representatives of the groups said last week. The efforts are not entirely new - directors of Southwest County's Realtor group began warning local brokers of a rash of suspicious transactions in 2005. [...] Those transactions have since sparked a rash of lawsuits, an investigation by securities regulators and administrative action by the California Department of Real Estate [Editor's Note: but no criminal prosecutions].

• Still, leaders of the Realtor groups - with many others in the local real estate industry - say they have grown frustrated at the pace of the criminal investigations. And evidence of ongoing fraud is becoming a stain on the industry, they say. "We're going to do everything we can to shine as bright a light on this problem as we possibly can, partially with the hope that those with authority to act will act," said John Giardinelli, a Canyon Lake attorney who advises the Southwest Riverside County Association of Realtors and the Inland Valley Association of Realtors in the Riverside-San Bernardino area.

For more, see Realtor group puts the word out - again.

Criminals Find Mortgage Lending An Easy, Lucrative Industry To Get Into

In Michigan, The Detroit News recently ran a story reporting how easy it's been for those with criminal inclinations to "drift" into the mortgage lending business, and how rampant mortgage fraud has been in the state.

• Danny Stokes used to sell drugs, before he discovered it was safer and more lucrative to sell mortgages. Samer Fawaz and Bashar Farraj were students in a mortgage fraud class where they learned to inflate appraisals and bilk lenders. They murdered one of their fellow con men in their Sterling Heights mortgage office when the scheme began to unravel. Nelson Sumpter served time for fraud in a scam that drew national media attention in 1994. That criminal record didn't stop him from beginning a new career as a loan officer. He was recently indicted for fraud. [...] Mortgage fraud was easy for Hani Mortada. And the money was a lot better than what he had earned as a part-time clerk at the Dollar Store [who] went from a struggling part-time college student in Dearborn to a mortgage loan officer with $25,000 in the bank and a Cadillac Escalade in his garage.

***

• Sumpter, 42, of Pittsfield Township was indicted in September in what Wayne County authorities believe to be a scam to strip the equity from the homes of several elderly Detroit residents. The homes are now in foreclosure.

In describing how alluring the mortgage fraud business has been for criminals practicing their trade in other areas of criminal endeavor, a Wayne County assistant prosecutor explained:

• "You don't have to pull a gun on someone. You don't have to be on camera with a dye pack (as you are when robbing a bank). You're sitting at a desk. Someone brings you coffee. There's a lot of money, and sometimes it doesn't take any more than one forged signature," he said.

A local FBI official had this observation:

• "We are seeing people who two years ago were involved in drug trafficking," said Mark Bowling, supervisor of the FBI's regional office in Macomb County. They slide into mortgage fraud, he said, "because it's easier, it's safer and the amount of profit is incredibly high. Once they're in the mortgage fraud business, they see how easy it is."

For more, see Fraud deepens Michigan housing crisis (Metro Detroit's foreclosure explosion linked in part to mortgage scams).